2004 News Releases

DALLAS—The latest issue
of the Federal Reserve Bank of Dallas’ Southwest
Economy examines the demographics of health insurance
coverage in Texas, productivity gains in service industries
and the reason for Mexico’s export decline.

In “Who Doesn’t Have
Health Insurance and Why,” economist Anil Kumar
notes that lack of health insurance is on the rise,
with 45 million people nationwide going without coverage
sometime during 2003. With the rate of uninsured running
about 10 percent higher than the national average, Texas
is especially affected.

In 2003, 27 percent of Texans
were uninsured, Kumar writes, and more than half of
them were Hispanic. The numbers reflect Texas’
higher Hispanic population and may also be due to Hispanics’
larger presence at the lower end of the income distribution
and their probability of working for smaller firms that
do not offer health coverage.

Employer-sponsored health insurance
is the primary source of coverage in the United States.
Ironically, Kumar says, most of the uninsured are employed
but unable to get health coverage through their job.
“Therefore,” he concludes, “the workplace
could prove to be an important avenue through which
to reduce the number of uninsured.”

“Productivity Gains Showing
Up in Services” finds service providers catching
up with manufacturers in taking advantage of technology
and outsourcing.

The authors, Dallas Fed chief
economist W. Michael Cox, senior economist John V. Duca
and economics writer Richard Alm, compare productivity
data from manufacturing firms with a larger pool of
services-heavy nonfinancial corporations. The most recent
readings show the productivity gap narrowing substantially
in the current business cycle.

Investments in Information Age
technologies, especially the Internet, are finally paying
off for service companies, the authors say, with increasing
use of online transactions, better information management
and improved communications. Retailers, particularly
online merchants and discount chains, are using information
technology to streamline inventory, ordering and delivery.

“Surging services productivity
should help quell fears that the United States will
fail to keep up with other countries as it loses manufacturing
jobs,” the authors conclude.

China’s surging export activity
does not fully explain the slip in Mexico’s share
of U.S. imports, according to Dallas Fed senior economist
Erwan Quintin. In “Mexico’s Export Woes
Not All China-Induced,” Quintin attributes Mexico’s
downturn mainly to its dependence on U.S. manufacturing
activity.

Quintin notes that Mexico is a
key supplier to the U.S. manufacturing sector, while
consumer goods represent a large share of China’s
exports. While Mexico’s export losses in a few
sectors, such as TV sets and textiles and apparel, might
be blamed on Chinese competition, overall there is little
correlation between China’s gains and Mexico’s
losses.

“The downturn in Mexican
exports results primarily from the recent manufacturing
recession in the United States,” Quintin writes.
“And given Mexico’s litany of truly pressing
problems, China should be the least of the country’s
concerns.”